Rajasthan High Court - Jaipur
Commissioner Of Income-Tax vs Golcha Properties (P.) Ltd. on 30 October, 1986
Author: N.M. Kasliwal
Bench: N.M. Kasliwal
JUDGMENT
1. This case relates to three assessment years 1972-73, 1973-74 and 1974-75. The office is, therefore, directed to register three cases separately for the above-mentioned three assessment years as Case Nos. 7 of 1978, 7A of 1978 and 7B of 1978, respectively.
2. The Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, has referred the following two questions of law for the opinion of this court:
"1. Whether the Appellate Tribunal was right in law in holding that the provisions of Section 220(1) of the Income-tax Act, 1961, were inoperative in the case of a company which was in liquidation by the orders of the winding-up court ?
2. Whether the Appellate Tribunal was right in law in holding that interest under Section 220(1) of the Income-tax Act, 1961, was not chargeable in the case of the assessee-company ? "
2. Brief facts of the case are that M/s. Golcha Properties (Private) Ltd., hereinafter referred to as the "assessee-company", went into liquidation and the management of the company came under the control of the official liquidator attached to the Rajasthan High Court. For the assessment years in question, regular assessments were completed and thereafter the Income-tax Officer charged interest under Section 220(1) of the Income-tax Act, 1961, hereinafter referred to as "the Act", as the demands remained unpaid after the expiry of the time stipulated under Section 220(1) of the Act. The official liquidator moved applications to the Income-tax Officer under Section 154, as according to him, interest under Section 220(2) of the Act was not chargeable in the case of the company which had gone into liquidation by the orders of this court. The official liquidator claimed that Section 446(1) of the Companies Act, 1956, read with Rule 179 of the Companies (Court) Rules, 1959, prohibited the charging of interest under Section 220(2) of the Act, after the date of the winding-up order. The Income-tax Officer did not agree with the contention of the assessee-company and held that Rule 179 of the Companies (Court) Rules was not a bar to the charging of interest under Section 220(2) of the Act. The Income-tax Officer further held that Section 446(1) of the Companies Act was not applicable as charging of interest under the said section was not a measure for recovery of tax demand and thus it was not a legal proceeding for which leave of the court was necessary.
3. The official liquidator, on behalf of the assessee-company, filed an appeal before the Appellate Assistant Commissioner. An additional plea was also taken that Section 220(1) of the Act was inoperative in the case of a company which was in liquidation by the orders of the winding-up court. The Appellate Assistant Commissioner repelled the assessee's contention and upheld the order of the Income-tax Officer.
4. The official liquidator then filed a second appeal before the Income-tax Appellate Tribunal. The Tribunal placed reliance on the decisions of the hon'ble Supreme Court in S. V. Kondaskar, Official Liquidator of the Colaba Land & Mills Co. Ltd. v. V.M. Deskpande, ITO [1972] 83 ITR 685 and Union of India v. India Fisheries (P) Ltd. [1965] 57 ITR 331. The Tribunal, placing reliance on the above Supreme Court decisions, held that the Income-tax Officer had jurisdiction in such cases only up to the stage of quantification of the income-tax demand. After the service of demand notice on the official liquidator, the Income-tax Officer ceased to have jurisdiction and thereafter the company court could only scrutinise the demand to judge the correctness and to determine as to what demand should be paid and when. It was also held by the Tribunal that specific provisions of the Companies Act will have precedence over the general provisions of the Income-tax Act. In view of the above circumstances, the Tribunal accepted the contention raised on behalf of the assessee-company and set aside the order of the Appellate Assistant Commissioner and the Income-tax Officer.
5. The Department submitted an application for making a reference and the Tribunal has referred the above questions of law for the opinion of this court.
6. Mr. Surolia, learned counsel for the Revenue, was unable to show any later decision of the Hon'ble Supreme Court taking a different view from the view already taken in the cases of S.V. Kondaskar v. V.M. Deshpande [1972] 83 ITR 685 and Union of India v. India Fisheries (P) Ltd. [1965] 57 ITR 331. The Tribunal has decided the case by placing reliance on the above-mentioned two Supreme Court decisions and no argument has been raised by learned counsel for the Revenue to show that the Tribunal in any manner committed any mistake in taking the above view. As the questions of law referred to us are already concluded by the above-mentioned two decisions of the hon'ble Supreme Court, we answer the above questions in the affirmative and against the Revenue. There will be no order as to costs.